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High-tech entrepreneurship in India
Sridar Iyengar, President, TiE Inc
Stanford University, School of EngineeringApril 5, 2004
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Global entrepreneurship monitor (GEM) findings in India
• GEM, a joint research by Babson College and London BusinessSchool, quantifies various factors that determine entrepreneurialactivity globally
• India fares fairly well on the entrepreneurship scale:
• Small entrepreneurial new firms created 33 million new jobs in 2003
Parameters for measuring entrepreneurial acitivity Global Av India
TEA * Index - overall 9 17.9
TEA Index - men 13.3 19.46TEA Index - women 8.5 9.62
Ratio of impact of start-up vs entrepreneurial activity of existing firms 5 10
Level of necessity start-up activity (%) 33.3 27
* Total entrepreneurial activity (TEA) index measures # of start-up entrepreneurial ventures
Source: GEM & www.outlookmoney.com
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Trends influencing high-tech entrepreneurship in India
• The rapid pace of globalization and the fast growth of Asian economies
present tremendous opportunities and challenges for India
• Increasing outsourcing to India not just for services but also for core
business, engineering activities & cutting edge R&D work
• IT off-shoring industry has spawned market for number of ancillary industrieslike entertainment, media, transportation, hospitality, infrastructure etc
• “Micro-Multinational” model gaining popularity providing globalization of
talent, markets, business models & capital
• Migration of number of Business Unit functions
• World class knowledge of technology, markets, systems; adhering to global
quality standards
• Strong US linkages especially with SV, known for its entrepreneurial culture
• Estd. > 50% of SV VC portfolio leverages India connectivity, in some cases
being a pre-requisite for investment
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Enabling environment in India
• IP protection, information security, telecommunication infrastructure
probably most advanced in the world, government policies provide the right
environment
• American-born children of Indian immigrants emerging as the new
generation of high tech entrepreneurs - equally familiar with both cultures
and operate in a transnational context
• Returning Indians who have held leadership positions and or have access
to leading edge technology and exposure to global operations
• Availability of role models and aspirational success stories
• Mushroomed new high tech clusters eg in and Hyderabad which offer
infrastructure including broadband access and a skilled labor pool
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Enabling environment in India … contd.
• Culture changes – ‘business failure de-coupled from personal failure’
• Access to high end technology
– Semi-conductor fabs, nano-technology parks etc being setup
– Pharma, life-sciences, biotech & other industries becoming attractive
• High value early stage opportunities arise from :
– Knowledge of high technology development across the world – Availability of talent that has exposure to both MNC & start-up work
– Potential to service both international and the under serviced domestic market
– The SV/US – India corridor resulting in strong relationships and a huge network
– Changing mind-set of willingness to take risk and wanting to succeed
• Thus Innovative Technology / Intellectual Property based product and
services companies are being seeded
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Challenges in India
• Challenges in India:
– McKinsey & Company survey shows two skill gaps in most Indian
start-ups:
• entrepreneurial (how to manage business risks, build a team, identify
and get funding); and
• functional (product development know-how, marketing skills, etc.)
– Indian entrepreneurs have very little access to “Risk” capital
• Changing trends mitigating above challenges:
– Various educational institutions like IITs and ISB provide right skills that
promote entrepreneurship and also incubate start-ups
– Seed/ angel funding VCs increasingly seeking opportunities
• Though successful in services, India still unable to compete
effectively with China in manufacturing
Thank you